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<span style=”color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>The Role of Exchange in derivative instruments.</span>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>1. It protects the counter party risk by collecting a caution deposit(Refundable) from both Buyers & Sellers.</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>2. It makes a settlement between current market price and strike price on daily basis.</p>
The exchange should protect the counter party risk if any by means of collecting the deposit and make the deal successful between its traders.
exchange will make a contract between the buyer and seller and get it signed by them. They also get caution deposit from both buyers and sellers to manage the risk. Also settlement is made in traders account on day to day basis based on price movement.
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